Logistics Lowdown - October 2016

We give you the skinny in the big bad world of logistics. Read this curated collection of articles every month to learn about the latest developments and most pressing problems facing our fast-changing industry.

1.

PEAK SEASON SURGE: LATE TO ARRIVE, BUT HERE

Market trends seemed to indicate a low-key peak season this year, but the rise in prices for containerized imports from Asia to the U.S. this past week signals that a late peak season surge is currently underway. With space on vessels tight – at least until products are on the shelves for Black Friday - importers who exceed the amount of freight they had signed for in service contracts with vessels will have to pay extra.

2.

WAREHOUSE SPACE TIGHT NEAR WEST COAST PORTS

The lack of available warehouse space near major West Coast ports is pushing developers to move inland into less desirable areas and to take up Class B and B- properties that require significant renovation. Demand is outpacing the supply of warehouse and distribution properties nationwide; vacancy levels have dropped to a 16- year low. The industry expects to see 4-5% annual growth in rental rates for the next few years and shippers may have to absorb higher transportation costs to move cargo farther inland.

3.

WILL MANILA DEFEAT PORT CONGESTION WITH TECH THIS HOLIDAY SEASON?

The Port of Manila is seeing triple the productivity in the yard after launching a new terminal appointment and booking system this year. Port officials have great expectations. Operating at a speed of 25 – 30 moves per hour compared to 10 moves per hour during periods of congestion, officials are optimistic the port will be able to handle the increase of volume leading up to the Christmas season.

4.

MEGASHIPS “BUNCHING” CREATES A BUNCH OF PROBLEMS FOR PORTS

When multiple large vessels call in close succession from one another, ports on the East and West Coast scramble to deploy the equipment and labor needed to unload them, causing productivity problems on the docks. Many variables can complicate this situation: whether a vessel is making a first call, when it’s arriving, how high the containers are stacked, and the need to lash containers for the voyage. Vessel bunching, as it is called, strains port resources both during and after the calls.

5.

CHINA EXPORT GROWTH TO SLOW, IMPORTS TO RISE

Contrary to the popular perception that higher wages are causing the manufacturing sector to slow down in China, it’s the entrance of Vietnam to the WTO and its improved infrastructure that is posing a rising challenging to China’s manufacturing might, says a senior economic at IHS Markit. China’s exports will continue to slow while Vietnam leads the pack of Asian nations, including India, Indonesia, and ASEAN, down a road of faster growth. On the flip side, imports will rise as China’s domestic consumption grows from one-third of consumption in Asia to two-thirds over the next two decades.